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Feb 21 2011 12:00AM

Question


Does the Social Security offset for a private pension for a person under 62 affect the full Social Security benefit they would normally receive at age 62?

Answer


FPA member Evor C. Vattuone, CFP®, of Aspire Capital Management said the following:

“The Social Security Administration (SSA) only considers government pensions in an offset for Social Security retirement benefits. The offset you are talking about may be the decision of the company providing the pension, which you can check out with a phone call to the company, but it will have no effect on the benefit from the SSA. Also, the pension does not count toward the ‘earned income’ limit that would reduce benefits if you're under ‘full retirement age’ and still working.”

FPA member Karl L. Hicks, CFP®, of Leonard Financial Group, concurred saying the following: “Generally, the Social Security offset does not apply to a private (non-government) pension. If your pension is one that has either a Social Security offset or a Government Pension offset, how it is calculated may depend on the agreement made with the Social Security Department. In general, your Social Security Benefits will be reduced by two-thirds of your (government) pension (SSA Publication No. 05-10007, May, 2008).”

In addition, Hicks noted that the Social Security fact sheet “SSA Publication No. 05-10007: Government Pension Offset” is a good source for review and education about the offset and how it affects benefits.

Hicks also said that there are tools on the Social Security website for offset calculations. Search ‘Social Security offset’, ‘Windfall Elimination Provision’ or ‘Government Pension Offset.’ “Any of these will provide additional information on how pension benefits affect Social Security Benefits,” Hicks said.

And lastly, "the best source may be the human resources department at the employer providing your pension benefits," Hicks said. “You should first verify that your pension benefits are even subject to the Social Security offset provision. If so, they should be able to show you how your pension benefits will affect you Social Security benefits.”

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